As reported in Banking Day earlier this week,  the Small Business and Family Enterprise Ombudsman, working with the Australian Bankers Association, has brokered a deal to lessen the chances that a major bank will foreclose on a small business owner for purely technical reasons (such as changes in key coverage ratios).Under the agreement, the Big Four banks will be less likely to call in defaults for technical contract breaches and will only be able to vary contracts in limited, specific circumstances.  The agreement also saw the new maximum threshold covered by the small business protections upped to $A3 million, well above the $300,000 set for other contracts. The deal was given the blessing of ASIC, which pointed out that "as part of industry's response to the ASBFEO's Small Business Loans Inquiry, the banks have separately agreed to changes in their small business contracts to limit the specific events of non-monetary default entitling enforcement action by the banks (such as insolvency).  "The banks will now provide an opportunity for a customer to resolve a breach of most of the specified events, and ensure that enforcement action can only be taken against the small business customer where the breach presents a material credit risk to the bank." Nonetheless, the Small Business and Family Enterprise Ombudsman, Kate Carnell, has questioned Commonwealth Bank's commitment to small business lending reform following evidence to a parliamentary select committee. Ms Carnell said it was good that banks had finally committed to complying with unfair contract terms legislation, but the lending threshold should be $5 million instead of the $3 million they have agreed. At the Select Committee on Lending to Primary Production Customers in Sydney on August 11, the Commonwealth Bank spokesman said: "Certainly, insofar as the discussions we had with Ms Carnell, we had a debate and a discussion around that. We feel that $3 million is a lot of money. Beyond $3 million, it is starting to get into a very serious amount of exposure. "We are very mindful that, obviously, as we lend more money, the risk to our organisation increases in absolute terms. The higher you push that threshold, one of the unintended consequences could be that the banks start to withdraw from the market.  "Why we feel $3 million is appropriate is that it tries to strike that right balance to achieve for the small business customers and provide greater certainty but also does not have the intended consequence of withdrawing liquidity from the small business market." Ms Carnell accused CBA of scaremongering. "Despite repeatedly asking, we have never received a properly justified explanation of why $5 million is such a problem, even when they have acknowledged that this is a very small percentage of small business loans (above $3 million)," she said in a media release following the "success" in signing the agreement.